Last week, a number of luxury fashion companies, including Farfetch, Richemont and Tapestry, showed ongoing signs of slowing demand. Elsewhere, Fashionphile took its first step into resale wholesale, a new category for the company. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
Slowing luxury sales
The luxury slowdown continues. Brands across the spectrum of luxury have reported slowing sales and depressed spending even among the wealthiest consumers. The latest is Yoox Net-a-Porter, which reportedly saw its sales drop by 10% over the six months ending in September, according to Richemont.
This is a particularly bad sign for Farfetch, which in October got approval from the E.U. to buy a controlling stake in YNAP. Farfetch is set to have joint control in YNAP alongside Richemont.
But Farfetch isn’t in a great position to be taking on a losing property right now. Its own market capitalization has fallen by more than 82% in the last year. Richemont’s overall sales grew by 12% in the last quarter, even with the losses from YNAP. But the folks at Richemont are no doubt antsy to get the company off their balance sheets.
Tapestry is another luxury company feeling the heat. It’s lost about 30% of its market value this year. After announcing its acquisition of Capri Holdings in August, the company has struggled to keep sales up.
As such, Tapestry cut its annual forecast this week. The deal to buy Capri will reportedly cost the company around $8.5 billion. Tapestry is on track to make around $6.7 billion this year, compared to its original estimate of $6.9 billion.
Fashionphile gets into wholesale
The luxury handbag and accessories resale platform Fashionphile made a step into a new sector of the resale industry this week. On Friday, Fashionphile announced that it had purchased the recently bankrupt Canadian wholesale reseller LXRandCo, Inc.
Resale wholesale, as opposed to the more familiar consumer resale space, is the term for a reseller that sources secondhand goods from individual sellers and then sells that product to a retailer in bulk. LXR did this for retailers like Century 21 and Lord & Taylor in the past.
Fashionphile plans to use LXR’s relationships and wholesale knowledge to sell off its excess inventory to other retailers, rather than trying to sell it all itself. While, compared to individual buyers, retailers will likely get a discount by buying bags in bulk, Fashionphile will likely make that up by not having to allocate resources to selling each piece individually.